Morgan Stanley earnings, revenue top expectations

Brennan Hawken, UBS director of equity research, provides his take on Morgan Stanley's Q3 earnings and turnaround plan. And Hawken weighs in on the headwinds facing other fixed income companies.

Morgan Stanley's third-quarter revenue jumped 50 percent, helping adjusted earnings beat expectations, as higher income from equities sales and trading made up for a drop in the Wall Street bank and brokerage's fixed-income business.

Morgan Stanley reported net income of $888 million, or 44 cents per share, from continuing operations in the quarter. That compared with a loss of $1 billion, or 55 cents per share, a year earlier.

The year-earlier figure included a charge of $2.3 billion to reflect a rise in the value of Morgan Stanley's debt.

"Our strategy to combine a world class investment bank with the stability of the largest U.S. wealth management franchise and strong investment management is enabling us to deliver exceptional advice and execution for our clients as well as stronger returns for our shareholders," Chairman and Chief Executive James Gorman said in a statement on Friday.

Gorman is scheduled to appear on CNBC to discuss the quarterly results at 11:30 a.m. ET.

US banks: Trading has been weak

Chris Kotowski, senior research analyst at Oppenheimer & Co, comments on U.S. banking earnings ahead of Morgan Stanley's results and says it's been a "weak quarter in trading".

Morgan Stanley has had difficulty with fixed-income trading for years, but the issues that affected the business in the latest quarter also shook most of its competitors.

Trading activity in the bond market slowed markedly during the period amid expectations the Federal Reserve would soon start to wind down its stimulative bond-buying program.

Morgan Stanley completed its acquisition of brokerage Smith Barney from Citigroup in June. It now collects all of the earnings from the former joint venture but must wait until 2015 to accrue all of Smith Barney's client deposits.